Investments

in refinery capaticies in Serbia

September 2016
Belgrade, Energy community
Vladimir Gagic, NIS, Refinery
Presentation content

1. Refinery history

2. Refinery today

3. Strategy and development

4. Key investments

5. Conclusion

2
 History of refinery

1959. 1965. 1968. 1979. 1985. 1987. 1999. 2001.- 2003. 2009. 2011.- 2013. 2015.

2011.
1959. Refinery Market
1979. 1999.
established as a liberalization
• Start of Atmospheric Distillation Unit S2100 Bombardment
business entity • Reconstructed Platforming S-300
2012.
Put into operation of
MHC-DHT Complex
Refining capacity 2001.
1965. Rebuilt
Start of construction 4.8 mln t/y refinery
of the first plant 2013.
Reconstructed FCC
2002.
1985. Reconstructed
Start of the process units: Vacuum Distillation
1968. • Vacuum Distillation, S-2200 2009.
• Bitumen, S-0250 Ownership
The first plants put into operation:
• FCC Complex and Alkylation transformation
• Atmospheric Distillation Unit, S-100
• Thermal Cracking, S-200
• Naphtha Platforming, S-300
2003.
• Diesel and Jet Fuel HDS, S-400
Reconstructed FCC 31.07. 2013.
Deadline according to
1987. the Rules * for
S-200 reconstructed into achieving the quality
Refining capacity Visbreaking Unit
1.3 mln t/y of petrol and diesel

31.12. 2015.
Deadline according to
the Rules * for
achieving the quality
of fuel oil
*Rules on technical and other requirements for liquid fuels of petroleum origin Fig. Gazette of RS, no. 123/2012 of 28/12/2012
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 Refinery today. Key competitors

Capacity
Country Owner Refinery MM tonnes Complexity

Hungary Duna 8,1 10,8

Slovakia Bratislava 6,1 14,4

MOL
Croatia Rijeka 4,5 9,1

Croatia Sisak 2,2 6,6

Bulgaria Burgas 9,5 9,1

Lukoil
Romania Ploesti 2,4 12,2

Romania OMV Petrobrazi 4,5 11,1

Romania Rompetrol Petromedia 5,0 10,3

Bosnia Zarubezhneft Bosanski Brod 3,0 7,1

1,0
Serbia NIS Pancevo 4,8 8,5 9,5*

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Source: NIS, workgroup analysis * Nelson index after refinery upgrade
Refinery today. Key business drivers

Margins under pressure SWOT analysis

- competition
- regulated prices  market related prices

Mogas / diesel imbalance

- need for max upgrading/conversion capacity
- need for export options
S W
Strenghts Weaknesses

O T
Product quality pressure
- Eurograde quality Opportunities Threats
- GHG balance – biofuels

Variability and uncertainty in demand growth escalate

globalization of the downstream sector
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Strategy objectives

NIS Refining business:

– Health & Safety

– Modern & efficient processes and operations

– Long term profitability based on sustainable development

model

– One of the most efficient refineries in South East Europe

– Zero per cent of heavy residues

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Development directions

– Increase Operation Availability

Efficiency
– Improve Technology Efficiency
– Increase Energy Efficiency
– Develop Personal Efficiency

– Use of conversion-type hydrogenation processes

New technologies
– Technologies that will allow termination of fuel oil
production

Key directions:
Maximize efficiency of existing refinery assets &
Introduce new technologies
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HSE Indicators
Block Refining

Health and Safety Industrial safety

Injuries (LTIF):

2006 – 69 injuries in Refinery

Maintenance activities per equipment

2016 – 0 injuries in Refinery

874 days
without Refinery workers injuries!

Our workers increased number of

observations and improvement
actions to more that 9000/year!!!

Equipment reliability index

- Number of maintenance activities on process equipment

decreased 68% after reliability program implementation!

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HSE Indicators
Block Refining

Environmental improvement indicators

Constant environmental improvement is what we plan and do!

2005 SO2 2014 2005 NO2 2014 2005 PM 2014

HSE Training in Refinery

- All Refinery and contractor workers

must be HSE trained in our Refinery
- There are theoretical and practical
training for all High risk works
- Our goal is to improve HSE culture
HSE Training center in Refinery

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Efficiency: key performance indicators

KPIs Achieved Results

NIS
Energy efficiency index
Energy efficiency
Q3/4
Q2/3
improved by 35%
Q1/2

2008 2010 2012 2014 2016

Operational availability
Q1/2

Q2/3 Operational unavailability

Q3/4
reduced by 47%
NIS

2008 2010 2012 2014 2016

NIS Personnel index Personnel efficiency
improved by 67%
Q3/4

Q2/3 Key refinery performance indicators

Q1/2
significantly improved
2008 2010 2012 2014 2016 10
Quartile breaks (Central & Southern Europe)
Key investments

Refinery modernization 1st phase (till 2012)

Mild Hydrocracking Complex (MHC) [completed]

Refinery modernization 2nd phase(till 2019)

Delayed Coker Unit (DCU) [in progress]

Introduction of the new technologies (phase realization)

Fully in line with NIS refining developement strategy by 2030
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MHC Complex [completed]

Scope
– Mild Hydrocracking complex
– Hydrogen Generating Unit
– Sulphur recovery unit
– Amine regeneration unit
– Sour water striper unit
Effects
-Increased yield of the diesel and petrol
-Improved quality of the products
-Reduced the content of the sulphur
(according to the Euro 5 specification)

Cost/Time Gasoline Before After

Sulphur, max, mg/kg 650 10
Total cost: App. 500 MM EUR Benzene, max, % (v/v) 5 1
Total aromatics, % (v/v) 65 35
Realization (EPC phase): 2009-2012 Pb, mg/l 13 0
Diesel Before After
MHC Technology: Chevron Sulphur, mg/kg 5.000 (avg) max. 10
Polycyclic aromatics
ЕРСМ contractor: CB&I Lummus max, % (m/m)
not limited 11

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MHC Complex [completed]

MHC/DHT FEED
– Petroleum, Light & Heavy Gas Oil
from Crude Distillation Unit
– Vacuum Heavy & Light Gas Oil from
Vacuum Distillation Unit

KEY FLOWS
– Unconvertible Oil: Feed to FCC unit
– Low sulphur kerosene: Diesel
blending (high quality jet fuel)
– Low sulphur Euro Diesel: High quality
product (Euro 5 standard)

MCH: Realized fully in line with NIS refining developement strategy

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 MHC Complex [completed]

Implementation Schedule
2006 2007 2008 2009 2010 2011 2012
№
I II III IV I II III IV I II III IV I II III IV I II III IV I II III IV I II III IV

1 MHC

2 Design & survey work

3 Equipment and Materials

4 Construction and assembly works

5 Other

Project realized within planned budget and projected time frame.

Proved projected process performance

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Delayed Coking Unit (DCU) [in progres]
Scope
New Units
– Delayed Cocking Unit
– Amine regeneration unit
– Acid waste water treatement unit
Revamping of existing Units
– MHC/DHT hidro cracking
– Sulphur & Merox Unit
Cost/Time
Total cost: App. 330 MM US$
Realization (EPCm phase): 2016-2019
DCU Technology: Lummus Technology
ЕРСМ contractor: TBA
Effects
– Increasing of refinery profitability
– Maximazing high-margin finished
products production
– Maximazing process utilization
– Increasing of flexibility (vs. market
requirements and constraints)
Product yield:
– Termination of Fuel Oil production
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Delayed Coking Unit (DCU)

DCU Feed
– Vacuum Residue from Vacuum
Distillation Unit
– Slurry oil from Fluid Catalytic
Cracking Unit.
KEY FLOWS:
– LPG: To LPG storage (after amine
washing & caustic treatment)
– Coker Naphtha and Light Coker
Gasoil: To DHT;
– Heavy Coker Gasoil: To Mild
Hydrocracking (MHC);
– The produced coke: Market (as coke
fuel grade)

DCU: Technology optimally selected for closing identified gaps

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 Delayed Coking Unit (DCU) [in progres]

Implementation Schedule
2013 2014 2015 2016 2017 2018 2019
№
I II III IV I II III IV I II III IV I II III IV I II III IV I II III IV I II III IV

1 DCU

2 Design & survey work

3 Equipment and Materials

4 Construction and assembly works

5 Other

Current project status:

- Confirmed Project Economical effectiveness and approved project budget
- Signed Purchase Orders for LLI equipment

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Delayed Coking Unit (DCU). Key phases

– Feasibility Study (completed 07/2013)

– FEED CONTRACTOR Selection (completed 02/2015)
– BASIC/FEED Design (completed 02/2016 )
– EPCM CONTRACTOR Selection (in progress)
– EPCM (expected duration is 28 months)

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Conslusion

– Key business challenges recognized and addressed

– Efficiency improvement program defined and realization
started
– First phase of refinery modernization completed
– Competitive position on the market significantly improved
– NIS refinery continues realization of significant investment
program despite negative macroeconomic environment

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